March 23, 2018 / 8:27 AM / a year ago

Elia to buy stake in German network operator 50Hertz for $1.2 billion

FILE PHOTO: CEO of 50Herz Transmission Company Boris Schucht addresses a news conference in Berlin, Germany, March 12, 2018. REUTERS/Axel Schmidt

FRANKFURT (Reuters) - Belgium’s Elia said on Friday it had decided to exercise its pre-emptive right to buy a 20 percent stake in German high-voltage energy network operator 50Hertz for 976.5 million euros ($1.2 billion), beating China’s State Grid.

The purchase, from Australian infrastructure fund IFM Investors, brings Elia’s ownership in 50Hertz to 80 percent, allowing Elia to fully consolidate the asset. IFM will continue to hold the remaining fifth.

State Grid’s [STGRD.UL] interest in the 20 percent stake, which first surfaced in December, has been viewed critically by German politicians, amid fears that China is taking control of key technologies while protecting its own companies against foreign takeovers.

“We welcome the decision by our majority shareholder Elia to exercise its pre-emption right. This is a strong signal to bring the energy transition forward in Germany as well as in Europe,” 50Hertz Chief Executive Boris Schucht said in a statement.

The transaction, expected to close in the second quarter, will be financed via 70 percent hybrid and 30 percent senior debt issuance, Elia said, adding it did not expect a change to its credit rating.

IFM and Elia bought 50Hertz from Swedish utility Vattenfall [VATN.UL] in 2010 for 810 million euros, meaning IFM was able to sell a 20 percent stake at six time the amount it paid. Elia was advised by Bank of America Merrill Lynch.

Reporting by Christoph Steitz; Editing by Douglas Busvine and Mark Potter

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